Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbCR MCAA)

Summary

This is the OECD Multilateral Competent Authority Agreement on the Exchange of Country by Country (CbC) Reports, to which the BVI International Tax Authority is a signatory. It is an agreement between the Competent Authorities (tax authorities) of participating jurisdictions, not a rule directly regulating private businesses, but it underpins the domestic CbC reporting requirements that apply to BVI Reporting Entities of large Multinational Enterprise (MNE) Groups.

• Purpose: Establishes the legal basis and mechanics for Competent Authorities to automatically exchange CbC Reports filed by Reporting Entities of MNE Groups, to help tax authorities assess transfer pricing and base erosion and profit shifting risks.
• Scope: Applies where an MNE Group is not an Excluded MNE Group (broadly, groups below a domestic revenue threshold are excluded) and has a Reporting Entity resident for tax purposes in a signatory Jurisdiction.
• Exchange mechanics: Each Competent Authority annually and automatically exchanges CbC Reports received from Reporting Entities resident in its jurisdiction with other Competent Authorities where Constituent Entities of the same MNE Group are resident or taxable, using a common XML schema and agreed electronic transmission and encryption methods.
• Non-reciprocal jurisdictions: A jurisdiction notified as non-reciprocal will send CbC Reports but will not receive them under the Agreement.
• Confidentiality and use limits: Information received must be kept confidential and used only for assessing high-level transfer pricing and BEPS risks or for economic and statistical analysis; it cannot be used alone as the basis for transfer pricing adjustments.
• Compliance cooperation: Competent Authorities must notify each other of suspected reporting errors or non-compliance by a Reporting Entity so the notified authority can take domestic enforcement action.
• Consultation and suspension: Authorities must consult on implementation difficulties or undesirable economic outcomes, and a Competent Authority may suspend or, after 12 months notice, terminate exchange with another authority for significant non-compliance.

For BVI-based MNE Groups and Reporting Entities, the practical effect is that CbC Reports filed under BVI domestic legislation will be automatically shared with the tax authorities of other jurisdictions where group entities operate, subject to the confidentiality and permitted-use safeguards set out in the Agreement.

Key obligations

• Competent Authorities must annually and automatically exchange CbC Reports received from Reporting Entities resident in their jurisdiction with other Competent Authorities of Jurisdictions with which the Agreement is in effect, where a Constituent Entity of the same MNE Group is resident or taxable
• A Competent Authority must notify the relevant Co-ordinating Body Secretariat and other Competent Authorities of its reporting start date, reciprocal/non-reciprocal status, transmission and encryption methods, and confidentiality/data safeguard framework at or shortly after signature, and promptly notify any subsequent changes
• A Competent Authority must notify another Competent Authority when it has reason to believe a Reporting Entity resident there has filed incorrect, incomplete, or non-compliant CbC information, and the notified authority must take appropriate domestic measures to address it
• Information received via CbC Reports must be kept confidential and used only for assessing high-level transfer pricing/BEPS risks or economic and statistical analysis, not as sole basis for transfer pricing adjustments
• A Competent Authority must notify the Co-ordinating Body Secretariat of cases of non-compliance with confidentiality and permitted-use rules, including remedial actions taken
• Before determining a systemic failure to exchange, a Competent Authority must consult with the other Competent Authority and, if it proceeds, notify the Co-ordinating Body Secretariat
• A Competent Authority may suspend exchange only after consulting the other Competent Authority on alleged significant non-compliance
• Termination of participation requires written notice to the Co-ordinating Body Secretariat and takes effect on the first day of the month after 12 months from the notice

Applies to

Competent Authorities (tax authorities) of signatory jurisdictions, Multinational Enterprise (MNE) Groups, Reporting Entities of MNE Groups, Constituent Entities of MNE Groups

Deadlines

• 18 months after the last day of the fiscal year: First exchange of a CbC Report for the fiscal year commencing on or after the date specified in a Competent Authority's notification must occur as soon as possible and no later than this period.
• 15 months after the last day of the fiscal year: For subsequent fiscal years, CbC Reports must be exchanged as soon as possible and no later than this period after the fiscal year end.
• one month after the date of the last signature of a written amendment: An amendment to the Agreement becomes effective on the first day of the month following expiration of this one month period, unless otherwise agreed.
• 12 months after the date of the notice of termination: Termination of a Competent Authority's participation becomes effective on the first day of the month following expiration of this 12 month period.